Why Housing Prices Aren’t Coming Back – The Globe and Mail


Last week I received a number of calls from Sellers concerned about the article in the Globe and Mail by Professor George Athanassakos from the University of Western Ontario called “Why Housing Prices Aren’t Coming Back.”

The premise of the article is that Canada is demographically moving into a period where there will be fewer people buying homes. Canada is dominated by an aging population who already own real estate, with fewer young people entering their home buying years willing or able to purchase the existing housing stock. As a result, the softening demand will result in an overall decline in house prices.

You can click HERE to read the article.

Without question, demographics play a role in the supply and demand of housing, but the complexity of the Canadian real estate market brings many factors which influence prices.

For example, Canada has always relied on immigration to fuel our economy and our housing market. Immigrants tend to pick large urban centres as a destination, which helps keep the demand for housing in cities stimulated. Government monetary policies and mortgage programs have also played as large a role in the increase in property values. With world governments using aggressively low interest rates to stimulate the global economy since 2008, cheap borrowing costs have prompted Canada’s housing prices to spike. Global real estate speculation has also played a factor. As other markets saw their prices drop, Canada’s solid real estate market attracted a massive inflow of foreign capital which contributed in part to the condominium booms of Vancouver and Toronto. So while demographics do play a role in housing prices, these other factors have contributed to the growth (and potential decline) of real estate values in Canada.

Furthermore, given the size of our country I always raise my eyebrows over predictions or trends that reflect the ‘entire Canadian real estate market’. With a resource rich country that straddles two oceans, is predominantly populated within 200 miles of the United States border and has become highly attractive to global investment by different cultural groups, Canada has several housing markets co-existing at once. Rarely are these markets operating in a similar cycle at the same time. Not only do we have these interrelated economies, but we also have distinctive regional markets. How the supply and demand of these regions change is not exclusively dependent on the demographic profile of Canadians.

When it comes to regional real estate values, not only are they operating on their own economic engines and resources, but each region often has a different approach to land use, density and design guidelines. Vancouver has a limited supply of land which makes vertical condominium living (with smaller units) a dominant housing form. On the east coast, most housing is comprised of single family dwellings. Plus there’s the matter of location, whether that be rural, suburban or urban geographies which play into demographics. Some areas appeal or cater to younger, professional or retiring populations.

For example, Kelowna, B.C has boomed because it is one of the warmest destinations in Canada. Given the massive number of zoomers moving into retirement, while some areas of the country may see snowbirds seeking an exit from our frostier climates, the demand for smaller cities with warmer weather should support a stable or increasing market value. Victoria, B.C, or Whiterock, B.C. are other destinations that, regardless of how much real estate values might drop in other parts of the country, could ultimately outstrip or keep pace with the demand for new housing geared to this market. However, a distinction must be made in the dwelling type. People moving into retirement will likely want to spend less than the property they’re selling, and they’ll want to have less property maintenance as they age. Count on seeing the lock-up-and-go condominium serving as a stable investment more so than the large single family dwellings which require upkeep.


The same goes for most urban centres. As long as any major Canadian city remains a stable economic engine in its region, and the destination of immigrants and career-pathing professionals in growth economies, those properties which are the most centrally-located will continue to rise in value simply due to proximity to the central business district, public transportation, and cultural amenities. The value of a Triple AAA location will trump demographics every time. I believe there will always be someone wanting to own in the most convenient coveted part of town.

We also have to be cognizant of a shift in the occupancy of housing. While there is a movement of smaller households, including single professionals into condominium housing, those large suburban houses that once contained middle class nuclear families are increasingly being purchased by large extended and multi-generational immigrant families. In fact, there are new suburban communities containing massive estate homes specifically geared to the style and needs of specific cultural groups. Instead of a family of four in 3500 square feet, these large suburban dwellings are being occupied by 8 or more people, several whom may be working from home.

I’m not here to disagree with the role of demographics as it relates to the housing market. In fact, there are likely several locations and dwelling types across the country which are susceptible to price drops because their target market is diminishing. The key here is to take a critical look at your property and assess who your future buyer is and whether you may be susceptible to a price drop because your target market is shrinking. For example, my sister and her husband custom-built a 2800 square foot ranch nestled on two and a half acres just outside of Victoria, British Columbia. It’s a stunning executive dwelling with lush landscaped grounds, two car garage with outbuildings and several indulgent lifestyle treats including a covered hot tub, an arbour with pond, and a sky mountain tree terrace. It is situated several minutes along a winding country drive about thirty minutes from downtown Victoria and just a few minute’s’drive to the bucolic golf course and luxury hotel of Bear Mountain Resort. Without question the house is best-suited for a pair of retiring Toronto or Calgary zoomers looking for the postcard perfect west coast lifestyle. As a strategy, they know the bubble of zoomers nearing retirement are their target market, many of whom will be cashing out and coming west over the next decade. However, if my sister and her husband delay selling too long, they know they may realize a lower price in the future if they don’t act sooner than later.

However, for downtown Torontonians, demographics are one dynamic of the market to be cognizant of, but not a significant one like it may be for other places.

Do you need assistance? At urbaneer.com we’re here to help, all without pressure or hassle. We simply love what we do.

~ Steven and the urbaneer team

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